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Mayor seeks tax decrease, gets flak

A call for negotiations over decreasing property taxes in Spring Hill was met with criticism Friday, after some city officials saw the suggestion as a political stunt.

In an email Thursday night, Mayor Michael Dinwiddie asked members of the city’s Budget and Finance Advisory Committee to consider decreasing city property taxes by 23 percent. The mayor said he was pursuing the decrease for the 2013 fiscal year, which will be the first in five years that the city will not have to transfer money from the city’s general fund to its water fund to make up for mismanagement by the city’s previous administrator.

In 2007, state auditors told city officials $4 million would have to be returned to the water fund at a cost of $785,000 a year for five years.

“From talking to Mr. (James) Smith (finance director), I understand the portion of the current property tax being used to repay our debt is fourteen cents,” Dinwiddie wrote. “Once that debt has been re-paid, the purpose of that fourteen cents will have been served. Rather than simply find another way to hang onto the resident’s [sic] money and spend it, I would like to return it to them in the form of a tax decrease.”

The mayor said he disagrees with a practice of levying a tax to fund certain payments then keeping it in place to fund other purchases or projects when the need for the tax is gone. He said the best action would be to reduce the rate, then levy more taxes or rely on sales tax and building permits — which he believes will pick up over the next year — as needed to make lease payments or capital improvement expenditures.

However, Alderman Amy Wurth, chairman of the finance committee, said the city is still in debt. She said this debt, along with purchases to respond to the city’s growth, are cause to keep the tax at its current rate of 59 cents per $100 of assessed value — $147.50 for a home valued at $100,000. It is also the goal of the committee to establish a reserve that could cover the operations of the city for three months, in the event of an emergency, she said.

She added that the BFAC never budgets for revenues that are not in hand at the time of the budget’s creation. She said the only expenditures a city can plan for are those that are backed by existing revenues. She recalled a problem created when the city’s property tax was eliminated in 2005, which need drove the city to once again levy the tax in 2008, as proof of the loss in property tax revenue.

“Our needs have changed, and we need additional public safety employees and additional infrastructure to incorporate our population boom,” she said. “Our city’s not the same as it was then. I’m just not willing to look at (a decrease) until we have enough in reserves … I’m very cautious because it’s easy to play politics with tax rates, and I’m just not willing to do that.”

Wurth and Vice Mayor Bruce Hull, a fellow finance committee member, said the mayor’s email was the first expression of dissatisfaction they had heard in regard to the tax rate in recent months. The city was able to maintain its property taxes for the current budget year, and even budget a few capital purchases, something the city had been unable to do in recent years because budget constraints had caused a freeze in capital improvements.

Hull said the mayor’s email was simply a political gesture, which he said was brought about by the impending mayoral election, scheduled for April. Hull said he plans to challenge Dinwiddie for the position next year and saw the move as one to garner votes. The mayor’s insistence that those who disagree with a tax decrease be named is further evidence of that, he said.

“Until we get to the point where we have at least three months of operating costs in reserve and pay off our debt, 59 cents is a very low tax rate compared to our surrounding cities,” Hull said. “He’s running for mayor, and he wants to paint himself as an ultra-Conservative. … I won’t support a property tax decrease. It’s very low, we’re managing it well and we’ve got too much to do.”

Dinwiddie argued this is not the case. He said his motivations for emailing the committee were purely on principle. He said the economy is picking up and he expects it to pick up further. The city has survived in its use of the 14 cents for debt payment, so the mayor questioned why the tax could not be eliminated.

“I haven’t even declared one way or the other if I’m running. This is a matter of principle for me,” Dinwiddie said. “We’re about to pay off something that we’re currently taxing for and therefore we should pay that tax back to the people. If we don’t want to pay that back to the people, as apparently some aldermen have expressed, those people should be named.”